Shared from the 1/11/2022 Houston Chronicle eEdition

Pipeline giant adding Navitas in $3.25B deal

Enterprise Products gains Midland Basin link

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Jerry Baker / Contributor

Enterprise Products Partners is expanding its pipeline network with the purchase of Navitas Midstream Partners.

Houston pipeline giant Enterprise Products Partners plans to acquire Navitas Midstream Partners for $3.25 billion, entering one of the most prolific parts of the Permian Basin.

The all-cash transaction, one of the largest acquisitions of a private natural gas gathering and processing business, will add about 1,750 miles of pipelines and more than 1 billion cubic feet of natural gas processing capacity to Enterprise in the core of the Midland Basin in the Permian, the nation’s most productive oil field. One in five land drilling rigs operating nationally are located in the Midland Basin, where more than 40 independent and publicly traded producers are active.

The pipeline deal, which Enterprise will fund using cash on hand and borrowings under its credit line, is expected to close in the first quarter, subject to customary regulatory approvals.

“The Navitas management team has developed a premier system in the heart of the Midland Basin,” said Jim Teague, co-CEO of Enterprise’s general partner. “We do not have a natural gas or natural gas liquids presence in the Midland Basin other than downstream pipelines. This acquisition will give us an entry point into the basin.”

The acquisition is the oil industry’s largest so far this year as companies look to pool resources and cut redundancies to weather the oil market’s boom and bust cycles. Oil executives expect more mergers and acquisitions in the Permian as increasingly volatile energy prices and growing uncertainty over the future of fossil fuels drive the industry to consolidate.

Randy Fowler, Enterprise’s co-CEO, said Enterprise was attracted to Navitas’ system of low-pressure natural gas gathering pipelines, which will provide additional value to its customers as well as cash flows to the company. Navitas Midstream’s pipelines are expected to support up to 10,000 drilling sites, or over 15 years of drilling inventory based on current rig counts.

“This investment will provide Enterprise with an attractive return on capital and support additional capital returns to our limited partners through distribution growth and buybacks of common units,” Fowler said.

The Woodlands-based Navitas is a privately held company formed in 2014 by R. Bruce Northcutt, Bryan Neskora and Jim Wade in conjunction with Warburg Pincus, a global private equity firm. The co-founders previously built Copano Energy into a $5 billion enterprise before it was sold to Kinder Morgan in 2013.

After launching Navitas, the co-founders added 750 miles of pipelines and more than 1 billion cubic feet per day of new processing capacity in the Midland basin.

“We are excited to contribute our unique Midland Basin system to Enterprise, one of the premier midstream operators,” Northcutt said in a statement. “We have succeeded in our goal of creating a unique company that provides critical infrastructure to meet the needs of our Midland Basin producers.”

Enterprise is one of the largest publicly traded partnerships and leading North American provider of pipeline transportation to producers and consumers of natural gas, natural gas liquids, crude oil, refined products and petrochemicals. The partnership’s assets include approximately 50,000 miles of pipelines; 260 million barrels of storage capacity for natural gas liquids, crude oil, refined products and petrochemicals; and 14 billion cubic feet of natural gas storage capacity. paul.takahashi@chron.com twitter.com/paultakahashi

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